2-3GW Trans-Tasman HVDC Cable Set To Increase Supply, Decrease Price Of Electricity For Kiwis

04 March 

After two years of engineering feasibility testing - including thousands of simulations to the ‘nth degree’ by a leading global manufacturer - the first trans-Tasman undersea High Voltage Direct Current (HVDC) cable has received the green light to make its first public announcement.

Taslink is a 2-3GW HVDC submarine cable extending 2,600km across the Tasman Sea to facilitate the two-way trade of surplus electricity between Australia and New Zealand.

Taslink is currently the world’s deepest HVDC cable in development, at just shy of 5,000m.

Taslink will:

1. Increase generation and transmission capacity in both markets

2. Increase wholesale supply in both markets

3. Increase retailer competition in both markets

4. Support the acceleration of renewable energy in both markets

‘“Taslink provides a two-way street for both markets to maximise renewables, by trading between the two morning and evening peaks across both markets, and flattening peak electricity prices,” says Richard Homewood, co-director of Taslink.

Taslink is projected to increase NZ’s grid capacity equivalent to 40% of country’s daytime demand, which allows for more generation and load, and grid stability through the provision of access to alternative generation to South Island hydro.

“Looking back towards last winter, as an example, had the cable been in operation last year, New Zealand would have experienced a very different winter. Independent analysis indicates that, even conservatively speaking, Taslink would have reduced $400m in power costs for New Zealanders - or a 23% reduction - in August alone,” says Mr Homewood.

Taslink is a trans-Tasman operation with Mr Homewood as New Zealand director and John Telfer as Australia director. Together, they have over two decades of experience in renewable energy and utility-scale infrastructure across both markets.

The announcement today signals the trans-Tasman project’s official invitation to global private investors to submit expressions of interest for the project’s second round of capital raising. The first round was raised privately.

“Over the past two years, we have been disciplined in asking ourselves the question: could this project stand on its own two feet, commercially, even without the addition of public investment?,” says Mr Homewood.

“Late last year, we received confirmation that this is possible.”

Mr Homewood is clear that the project is not proactively requesting public funding - though the option for governments to have future involvement is always there.

“For projects of this scale - especially critical energy infrastructure with a lifespan of 50-80 years - confidence about non-governmental commercial feasibility is king. While future governments, over the lifetime of the asset, may choose to have a financial stake in Taslink - and there is room for that to happen - that cannot be the starting point.”

The project estimate sits at NZ $12 billion, with the second round capital raise targeting funding for product development. A third round will focus on capital expenditure.

Electricity as NZ’s fastest-moving export product

The real-time import and export of electricity between the two markets will mean that electricity becomes NZ’s fastest-moving export and import product.

“Electricity travels nearly at the speed of light and is the final consumer good. Being able to import at this rate makes a fundamental difference, when you compare this to the days taken up for importing other forms of energy via sea vessel, before it then needs to be converted into electricity.”

“When you think about that in the context of a Kiwi mum or dad flicking on a light switch in the Waikato, and the speed at which that electricity was not only generated in Australia, but also imported into New Zealand, it’s phenomenal.”

HVDC technology

HVDC technology has been around since the 1950s, and NZ was a global pioneer in this, with the Cook Strait cable being one of the first in the world.

Today, HVDC is fast becoming the preferred way for electricity to travel in the developed world, with Europe and Asia leading the way.

The North Sea Link (UK-Norway) is an example of a two-way, bilateral HVDC cable.

Two years in the making

“We went into this process two years ago, aware that other parties had scoped out HVDC previously, but the deterrents for them had included the depth at nearly 5000m and the unique challenges of the trans-Tasman sea weather conditions,” Mr Homewood says.

The two-year development process for TASLINK has been shaped by local innovation and R&D. The core engineering team for the project is based in Auckland, and the specialist HVDC expert team is led by one of the world’s leading HVDC experts, John Gleadow, a New Zealander who was pivotal in the evolution of the HVDC Inter-Island link - commonly referred to as the Cook Strait cable. He has since been involved in some of the most technologically challenging HVDC projects in the world.

“John’s leadership gave us the confidence to then run a global tender process for a specialist design and manufacturing partner.”

“The robustness of our team has been fundamental to our ability to launch a global tender process and successfully secure a partnership with one of the world’s leading HVDC cable manufacturing firms. This partnership has represented a strong endorsement of the project’s feasibility from an international perspective, and a testament to the local resources and expertise driving the project.”

Mr Homewood says that, to have confirmation of engineering feasibility, the team had to successfully answer the following questions:

1. Is it possible to manufacture a cable that could withstand being installed down to 5,000m?
2. Would it be possible to manufacture a new product while still maintaining a viable project cost?
3. Can we also maintain cable losses to a sufficiently low level to ensure economic viability?

“We are delighted to say that the answer to all three questions is yes.”

Note:

How Taslink will impact Kiwi households and businesses

1. Currently, high peak prices during morning and evening hours - especially in dry years and at winter peaks - put high pressure on electricity prices.

2. When Taslink comes online, the two-way trading of electricity between Australia and New Zealand begins almost instantly - in less than 0.01 of a second (99% of the speed of light).

3. This causes peak electricity prices on both sides to reduce as demand flattens, and resulting in the reduction in wholesale electricity peak prices as trade opens up between the two markets and both countries trade surplus power, flattening peak demand.

4. This then incentivises new entrants to enter the market, thereby increasing competition with a reduction in peak electricity prices creating an environment conducive to new entrants into the retail electricity market.

5. Retail electricity prices come down, with increased competition driving downward pressure on pricing.

6. A stable electricity market leads to jobs, growth, and prosperity as the New Zealand electricity market stabilises, paving the way for economic growth prosperity for business and the public

Taslink will connect into the Newcastle grid on the NSW side

Taslink will connect into the NSW grid, and be in prime position to leverage the renewable energy benefits of the Hunter-Central Coast Renewable Energy Zone (REZ)

The Hunter-Central Coast REZ intended network capacity of 1-2 gigawatt, while the Hunter Transmission Project will deliver up to 8 gigawatts of additional transfer capacity from inland REZs to support the decarbonisation of existing industries.

Taslink will complement the Hunter Transmission project, by increasing capacity within the planned 500KV ring of transmission infrastructure that become the states transmission backbone, and providing NZ an import avenue that will support acceleration of our renewable growth.

The Hunter and Central Coast regions have unique features which make them ideal locations for a REZ. These regions have excellent renewable energy resources and can utilise existing power stations, rehabilitated mining land, electricity network infrastructure, port and transport infrastructure and a skilled workforce.

The modernisation of the Hunter-Central Coast electricity system will assist industries to decarbonise and access cleaner, cheaper and more reliable renewable energy by connecting new renewable energy and storage projects.

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